Once a stock gets active many traders will ask me if it’s too late to get involved in it. I will then take a look at my daily or weekly chart and see if we have met key targets in the stock or not before I answer that question. Target 1 for any of my trend trade setups is always the 1.272 extension of the swing into the setup zone.
In the case of IBM, the original trade setup started to play out in July of this year when a key 100% projection was tested and essentially held. Note on the weekly chart that a prior decline was $28.50 into the August 2011 low and the decline into the July 2012 low was very similar at $28.84. As long as price holds above this low, the initial upside target remains at the 218.53 area.
Now just because I think we may see that target does not mean I would buy these new highs in IBM, but I WOULD definitely watch for another entry on a symmetrical pullback that would ideally hold somewhere above the 8/30 low made at 193.18. Right now I would be stalking the 198-200 area for a new entry. This pullback zone would need to be recalculated IF a new high is made beyond the 9/17 high.